Mercury NewsHP Chief Executive Mark Hurd took home more than $19 million during 2006, including one of the largest cash bonuses in Silicon Valley history, the company disclosed Tuesday.
In a year that saw a high-profile boardroom spying scandal and a doubling of the company's profits, Hurd was paid $1.4 million in base salary and an $8.6 million bonus as part of a total compensation package of $19.2 million, not including a grant of 500,000 stock options.
In 2005, Hurd received $24.4 million, including signing and relocation bonuses, along with 1.15 million stock options. Most top HP executives, including Hurd, received fewer restricted stock and option grants and only a slight bump in 2006 salary, but collected bonuses more than double those of previous years. Vyomesh Joshi, executive vice president of HP's Imaging and Printing Group, received a $2.4 million bonus and $1.9 million in stock, vs. a $1 million bonus and $4.1 million in stock in 2005.
``When you see somebody like HP, clearly a thought leader in this area, saying, `We're going to keep salaries at a modest increase, but we're going to allow the team to earn more on the bonus side,' the reasoning behind it is that they're going to be a performance-based culture,'' said compensation expert Steve Patchel of Watson Wyatt.
The rise in cash compensation and drop in stock grants might mean that HP is placing a greater value on short-term performance at the expense of long-term returns, Patchel said. "We are becoming more performance-based with regard to our compensation,'' said HP spokesman Ryan Donovan. "The goal is to tie as much of our top executives' compensation as possible to their performance at the company.'' Donovan declined to comment on the balance of cash bonuses vs. stock grants.
Hurd's $8.6 million cash performance bonus puts him in lofty company. Oracle CEO Larry Ellison received a $6.4 million bonus in 2006 along with his $1 million salary, and a $6.5 million bonus in 2005 on top of a $900,000 salary. Brian Halla, chief executive of National Semiconductor, received a $5.3 million bonus in 2006 on top of his $890,000 salary.
HP's executive pay packages include reimbursement for an annual physical exam, $18,000 in financial counseling and personal use of the company's corporate jets, though they do have to pay tax on aircraft use. HP covers the first 25 hours of Hurd's personal use of HP aircraft, and provides him a mortgage-interest subsidy, on top of a $2.75 million relocation benefit in 2005.
Hurd is credited with turning HP around after taking over in March 2005 from Carly Fiorina, who had been ousted by the board in February. The company's 2006 income was $6.2 billion, compared with $2.4 billion in 2005.
HP's stock price has risen 94 percent since Hurd joined, climbing 38 percent in fiscal 2006 to $38.74. It closed Tuesday at $42.31. The company's market capitalization grew 33 percent to $105.8 billion during 2006. It now stands at $115 billion, up more than 80 percent since Hurd took over.
Around Labor Day, news of HP's spying scandal broke, forcing Hurd and then-board chairwoman Patricia Dunn to combat allegations that HP had hired investigators who used deception to obtain phone records of board members, journalists, employees and others as part of an internal company probe ordered by Dunn into leaks of confidential board meeting.
Dunn, who resigned in late September in the scandal's wake, was paid $155,338 in stock and $18,000 in cash for her board service. The company did not disclose her severance package (if one exists), nor did it disclose possible severance packages for others who resigned in connection with the spying scandal, such as high-profile general counsel Ann Baskins or senior counsel Kevin Hunsaker.
EXECS' PAYOUTS ALSO BOOSTED BY 3-YEAR PROGRAM
RépondreSupprimerMercury News
Last week, Hewlett-Packard disclosed that it had given Chief Executive and Chairman Mark Hurd one of the biggest bonuses in Silicon Valley history as part of the $19 million he received in 2006. And Vyomesh Joshi, executive vice president of HP's Imaging and Printing Group, saw his bonus more than double.
So how did the rest of HP's executives do?
• Robert Wayman, who retired as chief financial officer in December, saw his annual bonus dip slightly to $4 million from $4.5 million in 2005. That was in addition to his $975,000 salary.
However, Wayman -- like other top HP executives -- also received an additional $4.1 million bonus under the company's long-term bonus program. The long-term bonus was established in 2003 and rewards performance over a three-year period, making 2006 the first year awards were made under this program.
• Ann Livermore, executive vice president of the technology solutions group, saw her salary increase to $793,750 in 2006 from $775,000 the year before. Her annual bonus more than tripled, to $2.8 million in 2006 from $789,448 in 2005. She received a $4.1 million long-term bonus. And after Hurd, she was the next biggest user of the HP corporate jet for personal reasons.
• Shane Robison, executive vice president and chief strategy and technology officer, also got a raise in salary to $746,250 for 2006 from $717,500 in 2005. His annual bonus jumped to $2.7 million in 2006 from $760,725 in 2005. And he received $2.7 million under the long-term bonus plan.
The payouts reflect the big year HP had, its first full fiscal year under Hurd. During fiscal year 2006, which ended in October for HP, revenue increased 5.7 percent and profits increased 158 percent. The stock price climbed 38 percent during fiscal 2006 alone to $38.74 per share. On Friday, HP shares closed at $41.69.
In other news: Speaking of big paydays, Oracle Chief Executive Larry Ellison sold another chunk of his huge pile of stock earlier this month.
From Jan. 8-12, Ellison exercised and sold 4.5 million options. With a strike price of $4.61, he spent $20.8 million to exercise the options, and sold them at prices from $17.48 to $17.96 to collect $79.6 million. That left Ellison with a net gain of $58.8 million.
After being flat for several years, Oracle's stock had a strong run in 2006, going from $12.21 per share at the start of the year to as high as $19.66 per share on Nov. 22. But in more recent weeks, the stock has slipped again, closing Friday at $17.15.